Royal Dutch Shell and Qatar Petroleum will study the development of a major petrochemical complex in the industrial city of Ras Laffan.
Qatar and Shell explore petrochemical project
Royal Dutch Shell and Qatar Petroleum will study the development of a major petrochemical complex in the industrial city of Ras Laffan. The move has raised questions over the future of an earlier agreement between Qatar and ExxonMobil to build what would be one of the emirate's largest energy-related projects.
Although ExxonMobil has not confirmed its exit from an agreement signed in January, Qatar has been publicly seeking partners for other chemical projects since then.
"There are some hiccups associated with that project," said Tony Potter, the managing director of the petrochemical consultancy Chemical Market Associates. "Obviously they didn't really find it interesting at this point."
Analysts suggest feedstock limitations in the country mean that if Qatar proceeds with Shell on a project, it could spell an end to ExxonMobil's agreement or Total's hopes to pursue a joint venture in Ras Laffan.
ExxonMobil withdrew from another potential project with Qatar in 2007, when it had planned to build what would have been the world's largest gas-to-liquids plant.
"It is not adding to your popularity if you start withdrawing," said Samuel Ciszuk, an energy analyst in London with IHS.
"ExxonMobil has taken a bit of care to take a more ordered and more diplomatic exit from this project than ConocoPhillips did," Mr Ciszuk said, citing the US firm's exit this year from a planned refinery in Saudi Arabia and Abu Dhabi's Shah sour gas project.
Yesterday's agreement signed in Doha by Qatar's energy minister, Abdulla Al-Attiyah, and Shell's chief executive Peter Voser, allows Shell to study development of a petrochemicals complex to produce 1.5 million tonnes of monoethylene glycol, a chemical used to make anti-freeze as well as 2 million tonnes of other speciality chemicals per year.
Analysts said Shell was likely to be a more attractive candidate for Qatar than Total because of significant involvement developing Qatari industry, including a gas-to-liquids joint venture with Qatar Petroleum and a liquid natural gas project with Qatargas.
"It is much in their favour if they have a working relationship which they can further upscale. So from that point of view, Shell was a better partner than Total was," Mr Ciszuk said. "They tend to choose the biggest players because of their financial stability."